The Obama IPO

Will technology developed by his campaign make the president a power broker for many elections to come?

President Barack Obama speaks during a Democratic campaign fundraiser at the Nob Hill Masonic Center in San Francisco, California, Feb. 16, 2012.

Photograph by Saul Loeb/AFP/Getty Images.

In the middle of 2008, Derek Dukes decided he wanted to help Barack Obama get elected president. He started raising money for the campaign, largely through the Local Lefties mailing list that his girlfriend helped to run in San Francisco’s Mission neighborhood, and regularly visited the campaign’s Market Street office for volunteer shifts. He saw many familiar faces there, either from his time at a Silicon Valley corporate headquarters (Dukes was Yahoo’s sixth employee) or the city’s startup scene (he had left Yahoo to launch the timeline website Dipity). “There had already been a little mini-collapse, and investment in the Internet pulled back,” says Dukes. “People in tech in San Francisco had a lot of free time.” Regardless of their backgrounds, these volunteers were being asked to make phone calls to voters in battleground states. When office organizers realized that Dukes, a technical product manager, had computer fluency, he was given data-entry tasks. “As a technologist, I thought the tools they were using weren’t very impressive but super-functional. It was obvious they could be doing things smarter and better,” he reflects. “But I wasn’t really involved at a level that I would give feedback or propose changes.”

Sasha Issenberg is the author of The Victory Lab about the new science of political campaigns.

Last week, Dukes encountered some of those same faces once again at a party to christen a new Obama “tech field office,” which for a month has been quietly enlisting skilled Bay Area supporters to take on more ambitious work than phone canvassing or data entry. Unlike the hundreds of field offices Obama will eventually open elsewhere in the country, the campaign isn’t inviting walk-ins to its SoMa outpost; volunteers need to demonstrate that they have advanced coding and program-design talents and schedule regular shifts by appointment. The tech team at Obama’s Chicago headquarters hopes to assign them entire projects, and has dispatched a top campaign official, Catherine Bracy, to oversee the satellite facility.

In 2008, most innovation was accidental, the result of a perpetually expanding campaign with a surfeit of talent and resources always looking to solve new problems. Much of the core technical work was contracted to outsiders: the web infrastructure to agency Blue State Digital, and the statistical models to Ken Strasma’s firm Strategic Telemetry. Yet this time around, most of those functions (and others) are being carried out by staff in Chicago—with new Silicon Valley-style titles like “chief innovation officer” and “product manager”—and boosted with extra help from West Coast volunteers. Just in the last week, the campaign has unveiled a new one-click fundraising protocol via text message and a fresh organizing interface it calls Dashboard.

“It’s clear they’re putting more effort into building back-end systems in-house this time,” says Jim Pugh, who worked on Obama’s online-analytics team in 2008 and now oversees technology for the lefty advocacy group Rebuild the Dream. “Any presidential campaign, and the Obama campaign in particular, is going to have some very specific requirements. Doing custom design for stuff like that can get them a lot more than would be possible just going through third-party sources or contract work.”

Those involved in Obama’s campaign are openly optimistic that their innovations will have an impact on the outcome in November, but their private conversations also raise tantalizing questions about what happens after the election. Could the technology developed by Obama's campaign make the president a political power broker for elections to come?

“If 2008 was the alpha test, this is beta. There are a lot of good ideas, and a lot of hypotheses will either be proven or disproven in this election through new product development and system improvements,” says Dukes, who has since founded Jetpac, a travel-app startup. “Problems that exist in campaigns are similar to problems that exist elsewhere, and people in tech see the parallels. It’s not clear there’s a $100 million exit option in political technology”—in other words, a large corporation willing to pay top dollar to buy out an entrepreneur’s idea—“but entrepreneurs in the Valley are starting to look at it.”

There is already a clear path to market for technology incubated in the service of electing Obama. As the campaign’s deputy field director in Georgia in ’08, Aharon Wasserman found himself spending as many as five hours each night collating data on his organizers’ activities—the number of local volunteer teams assembled, canvassing shifts assigned, voters contacted—into a spreadsheet sent to national officials in Chicago. Along with a volunteer, Justin Lewis, Wasserman designed a program to automate many of those reporting and monitoring procedures; eventually, his peers in other states heard about Wasserman’s breakthrough and asked if they could use it, too. “We weren’t thinking at the time that we were going to develop this for the entire campaign,” he says. “We were just trying to do something in Georgia.”

After the election, Wasserman, Lewis, and a third campaign volunteer, Edward Saatchi, combined to start a firm, National Field, to refine and market their program. In 2009, the Democratic National Committee became an early client, followed by state parties and congressional campaign committees. They began to think of their software as not just a Web-based internal reporting system for organizations, but a Facebook for an org-chart world, adding flourishes like pictures to individual profiles and distinctive features like “ups” and “challenges” designed to engender a sense of competition. “People don’t like to report in general, but if you make it feel like a good experience it becomes a place they want to go,” says Wasserman.

Last month, the 15-employee firm was granted a patent for its “hierarchical social network” design and has begun marketing their product to non-campaign clients, like Kaiser Permanente and Great Britain’s National Health Service, and Wasserman sees room for growth in the airline and education sectors. National Field’s identity remains tied up with Obama for America (the re-election campaign is a client), but the president’s political organization has never tried to assert its ownership of a technology incubated by its employees and volunteers on campaign time. “It never came up,” says Wasserman.

This year, however, the campaign already seems to be taking steps to formalize its relationship to the intellectual property being developed in its name. Unlike typical campaign volunteers, those who sign up to help at the San Francisco tech office are required to sign contracts with both nondisclosure and work-for-hire provisions, according to those familiar with the arrangement. But while employment contracts would probably make it easy to stop former staffers from selling the work they did for the campaign, Obama’s lawyers would struggle to prevent a volunteer from doing so. "It's hard to enforce an agreement where money or other valuable consideration isn't being exchanged,” says Michael Toner, general counsel of George W. Bush’s first presidential campaign. “As a legal matter, if you had a volunteer on a campaign that came up with some asset that had commercial value it would be hard to bar that person from using it for non-campaign purposes."

Even to enforce employee contracts, Obama for America would have to remain active long after what is likely its figurehead’s final run. It often takes a while for campaign committees to wind down—Bush-Cheney ’04 didn’t shut its doors until the spring of 2007—but usually they only stick around to settle accounts and comply with audits, not to control property. (Hillary Clinton for President is still paying off its debts.) Committees can’t continue fundraising unless it’s for a specific election, so if Obama were intent on keeping former staffers from getting rich off their campaign work he would need to end this campaign with plenty of money on hand to fund its ongoing activities, including lawyers’ bills.

If Obama is able to defend his ownership of campaign innovations, what could he do with them? Federal election laws were written to set rules for campaigns getting rid of things like copy machines and desk chairs, bumper stickers and posters, and the occasional pile of unspent cash. Less consideration has been devoted to the intellectual property developed in the service of an election—research binders, polling data, issue papers—which has tended to be worthless immediately after the polls close. The law appears to leave Obama wide latitude if he wanted to constructively liquidate his tech holdings after November: The Federal Elections Commission clearly encourages campaign committees to transfer assets to charitable organizations, which could even include the Barack Obama Presidential Library Foundation. (Such a foundation would be restricted by its own tax status on how the gift could be put to use.)

The same rules about winding down committees would probably allow Obama to leave an electioneering legacy by bequeathing his innovations as a sort of tech endowment for future Democratic campaigns. Federal law allows unlimited transfers of assets to party committees, which should mean Obama for America could sign over ownership of a valuable app or the code to a text-messaging protocol to the Democratic National Committee without any issue.

But what if Obama wanted to pick and choose which candidates benefited from his tools—like, for example, making sure that Democrats who voted against health care reform were on their own, or that Joe Biden got a boost over Hillary Clinton in the 2016 primaries? The FEC has carved out a specific exemption for campaigns to market one kind of intellectual property that campaigns generate for which there is high demand: their lists of fundraising targets, which can be sold to other campaigns. Would the commission treat a piece of software or a technological breakthrough that resides in a snippet of code the same way? “If the committee created an asset for its own use, it can sell that asset at fair market value to anyone, including a corporation,” says Neil Reiff, a former deputy general counsel for the Democratic National Committee. “They could even sell the same asset to more than one entity, like a list.”

Obama for America could probably use the same part of the law to become an off-the-books tech supplier for Democratic candidates. The FEC discourages campaigns from using asset sales to “engage in an ongoing enterprise, rather than an isolated transaction,” but is more open-minded if no cash changes hands. Candidates are permitted to swap their mailing lists with other campaigns, parties, and advocacy groups—as long as the traded items have the same value. Usually these swaps feature similar objects being traded—one group’s fundraising targets for another’s—but what if Obama offered favored 2014 congressional campaigns or Biden for President a yearlong software license in exchange for $5,000 of polling data or opposition research? Because no cash exchanges hands, neither party would be under any obligation to report the arrangement—which means Obama could keep an invisible hand in Democratic campaigns for years.

What if the campaign were more interested in just cashing out after November and distributing the revenue to political allies, charities, or sitting on it so Obama could remain a Democratic power broker in perpetuity? There is nothing in the law that would clearly prevent Obama for America from taking its most valuable technology and putting it out to bid in Silicon Valley—although the fact that such a loophole exists means that regulators would probably be quick to close it. "Something like an app that has durable market value—the FEC hasn't grappled with that question in the past,” says Toner, who served as the commission’s chairman. “I think it is unlikely that the FEC would permit a company like Google to pay a presidential campaign $1 million for an app with the campaign pocketing that money.” The Obama campaign has so far succeeded in thinking like a startup; now it just needs to decide what to do with its products come November.